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If there is no tenancy agreement, a tenant cannot be given a section 21 notice for eviction. Instead, a landlord must use a section 8 notice (with a ground for eviction). To be able to evict a tenant in the absence of a written tenancy agreement, a landlord will need to apply to the courts for a possession order.
Eviction: If there is no written contract, a landlord cannot evict a tenant through the 'accelerated' no-fault eviction process, which is also called a Section 21 notice.
A tenant without a written contract is still entitled to all the statutory rights a regular tenant with a contract is, including water, heating, a safe environment etc. In a similar vein, the tenant is still obligated to pay rent on time and take reasonable care of the property.
If there is no tenancy agreement therefore, then there is no authority for the landlord to make any deductions from the tenancy deposit no matter how dreadful the condition of the property when the tenant moves out. If he tries to make any deductions, any challenge made by the tenant will succeed at adjudication.